Ripple, the creator of XRPXRP

, couldn’t get Saul for the biggest case of their life — but they do have crypto enthusiasts backing them up.

The fate of XRP, the 7th largest crypto, rests on the outcome of a lawsuit by the securities exchange commission (SEC) — and investors are expecting big moves.

Is it centralized or decentralized?

Founded in 2012, Ripple’s software helps banks and financial institutions send money faster and cheaper — last valued at $10B with big investors including A16Z and Google Ventures.

They continued to find success with their own cryptocurrency, XRP — which has been criticized by many in the crypto community:

• They argue the coin goes against crypto’s fundamentals of decentralization.
• Unlike other crypto’s where no one controls the currency, Ripple owns nearly 60% of XRP.

So what’s the problem? When Ripple sold $1.3B of their holdings — they were sued by the SEC late 2020 for illegally selling to the public…

Is it a security or is it not?

The SEC’s argument: XRP should be treated as a security — similar to stocks and subject to similar regulations.

• The SEC alleges Ripple sold tokens to the public similar to how public companies issue stock — and it should be regulated as such.
• But why doesn’t this apply to other cryptos? Others aren’t controlled by one central group the way Ripple controls XRP.

Ripple is hoping to make a case for XRP similar to Ethereum and Bitcoin, which the SEC decided not to treat as securities back in 2018.

The verdict is expected in 2022 but if the SEC wins and XRP is forced to register as a security, there’ll be significant impacts…

Investors: Deciding moment

Investors are heavily divided on the lawsuit — with bears and bulls on both sides.

• Bulls: John Deaton, lawyer and founder of Crypto-Law.us — one of the largest advocates of XRP — expects XRP to win based on its current defenses.
• Bears: Phil Liu, chief legal officer at Arca, a crypto asset-management firm — doesn’t hold XRP — thinks SEC’s case is compelling (via WSJ).

Win or lose, XRP is expected to make big moves. Even with the lawsuit, XRP is up 370% this year — surpassing 2020 levels.

Beyond XRP: The lawsuit is a deciding moment for how regulators structure laws around crypto — which is still in its early stages.